Analyzing NVE (NASDAQ:NVEC) & ARM (NASDAQ:ARM)

NVE (NASDAQ:NVEC) and ARM (NASDAQ:ARM) are both computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, profitability, valuation, institutional ownership, risk, earnings and analyst recommendations.

Profitability

This table compares NVE and ARM’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NVE	54.59%	23.47%	22.73%
ARM	17.15%	14.01%	10.65%

Volatility and Risk

NVE has a beta of 1.27, indicating that its stock price is 27% more volatile than the S&P 500. Comparatively, ARM has a beta of 4.35, indicating that its stock price is 335% more volatile than the S&P 500.

Earnings and Valuation

This table compares NVE and ARM”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NVE	$25.88 million	12.36	$15.06 million	$2.92	22.63
ARM	$4.01 billion	33.03	$792.00 million	$0.75	167.04

ARM has higher revenue and earnings than NVE. NVE is trading at a lower price-to-earnings ratio than ARM, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

66.0% of NVE shares are owned by institutional investors. Comparatively, 7.5% of ARM shares are owned by institutional investors. 1.9% of NVE shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for NVE and ARM, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NVE	0	1	0	0	2.00
ARM	1	8	16	0	2.60

ARM has a consensus target price of $160.81, suggesting a potential upside of 28.36%. Given ARM’s stronger consensus rating and higher probable upside, analysts clearly believe ARM is more favorable than NVE.

Summary

ARM beats NVE on 8 of the 14 factors compared between the two stocks.

About NVE

NVE Corporation develops and sells devices that use spintronics, a nanotechnology that relies on electron spin to acquire, store, and transmit information in the United States and internationally. The company manufactures spintronic products, including sensors and couplers for use in acquiring and transmitting data. Its products comprise standard sensors to detect the presence of a magnetic or metallic material to determine position, rotation, or speed for the factory automation market; and custom and medical sensors for medical devices to replace electromechanical magnetic switches. The company also offers spintronic couplers for power conversion and industrial Internet of Things (IIoT) market; and DC-to-DC convertors for use in power conversion systems and industrial networks for the IIoT. In addition, it undertakes contracts for research and development, and licensing of spintronic magnetoresistive random access memory technology. NVE Corporation was founded in 1989 and is headquartered in Eden Prairie, Minnesota.

About ARM

Arm Holdings Plc engages in the licensing, marketing, research, and development of microprocessors, systems IP, graphics processing units, physical IP and associated systems IP, software, and tools. It operates through the following geographical segments: United Kingdom, United States, and Other Countries. The company was founded on November 12, 1990 and is headquartered in Cambridge, the United Kingdom.